Calif. Earmarks a Quarter of Its Cap-and-Trade Riches for Environmental Justice

This year, $230 million from the Greenhouse Gas Reduction Fund will go to programs for low-income and minority people.

Power plant smokestack behind a chain link fence in San Francisco, Calif. Credit: Tom Hilton/Getty Images

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One-quarter of the $872 million generated by California’s 18-month-old cap-and-trade scheme will go to housing and public transit programs for poor and minority communities this year, according to the recently approved state budget. The decision caps a long fight by environmental justice advocates over how much of the state’s carbon proceeds should be distributed to disadvantaged people, who are more likely to live near power plants and suffer disproportionately from toxic air pollution.

“These greenhouse gas emissions are being generated in the communities that have the highest pollution,” said Mari Rose Taruc, state organizing director of the Asian Pacific Environmental Network, a nonprofit in Oakland that advocates for environmental justice. “We’ve been working on these climate investments for low-income communities of color for over five years.”

By 2020, the program could funnel some $8 billion a year into the state’s Greenhouse Gas Reduction Fund, and California lawmakers have been battling for years over how that money should be spent. Should it be used only to promote renewable energy and other low-carbon programs? Or should the state use some of the money for other purposes?

In 2012, under pressure from environmental justice advocates, the legislature passed a law requiring 25 percent of proceeds to be spent in low-income and high unemployment areas and in communities plagued by health problems from heavy pollution. The law, SB-535, also required 10 percent of that money to go to directly to local businesses. The rest of the money could be spent at the lawmakers’ discretion, it was decided—so long as it helped curb global warming emissions.

But last year, with the state facing a monster deficit, Gov. Jerry Brown used $500 million from the Greenhouse Gas Reduction Fund to pay off some of the state’s debt, and the environmental justice programs never got the funding the law demanded. Brown is paying part of that—$100 million—back this year from the state’s general fund.  

Brown’s diversion showed there are no guarantees that government officials won’t dip into money generated by the greenhouse gas initiative, and that a budget line item was needed to prevent the environmental justice funds from being used in other ways.

California’s cap-and-trade program sets a ceiling on carbon dioxide emissions and requires polluters to pay for their share by buying carbon allowances in quarterly online auctions. It will help the state meet its ambitious goal of cutting climate-changing gases by 30 percent by 2020 to return to 1990 levels, and 80 percent from 1990 levels by 2050.

The program is the second-largest carbon trading scheme in the world, behind Europe’s Emissions Trading System. The only other cap-and-trade market in the United States is the Northeastern Regional Greenhouse Gas Initiative (RGGI), which includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Maryland and Delaware  have made it a priority to spend cap-and-trade profits on efficiency upgrades to low-income apartments—more than 4,000 so far in Maryland—and heating assistance or weatherization. Maryland has helped pay the energy bills of 104,000 low-income families and in Delaware, about 100 families are living in newly weatherized homes paid for by cap and trade.

California, however, is the only state to mandate that a portion of its proceeds from polluters be used to directly benefit low-income residents. As part of this push, the state Office of Environmental Health Hazard released an interactive map that allows residents to compare pollution in their area to that of neighboring towns.

Under the new budget, about $230 million, or 26 percent, of the $872 million cap-and-trade money will go toward environmental justice efforts. That includes $75 million to weatherize low-income homes and $25 million for transit and intercity rail networks in poor communities. A program called Affordable Housing and Sustainable Communities run by the state’s Strategic Growth Council will get $130 million to plan and build new housing and add amenities like public transit to existing neighborhoods.

“[The investments] will actually save these communities money,” Taruc said. “Whether that’s investing in bus passes for young people and seniors, or making sure energy efficiency programs like weatherization go into low-income homes, these are green cost savings to communities that are disadvantaged.”

Of the rest of the cap-and-trade money, about 60 percent this year will go to wetland restoration, energy efficiency upgrades for public buildings and recycling efforts. The remaining $250 million will help fund a controversial high-speed rail project connecting San Francisco with Los Angeles.

California’s cap-and-trade program is mandatory for electric utilities and industrial facilities and in 2015 it will be extended to include transportation network and natural gas companies. Eventually, 350 companies responsible for 600 facilities will play a part in the cap-and-trade market by buying, selling and trading permits.

Amy Nordrum is an intern at InsideClimate News.